GREY GLOBAL PUTS APCO ON BLOCK

Hires Bear Sterns to Identify Potential Buyers

NEW YORK (AdAge.com) -- Grey Global Group is looking to sell off its interest in APCO Worldwide, a Washington-based public affairs agency that was one of its fastest growing units throughout the 1990s, preferring to concentrate on its other global public relations brand, GCI.

Grey Global has hired investment bank Bear Stearns to identify potential buyers for its 70% interest in APCO. The remaining 30% stake is owned by the agency's president-CEO, Margery Kraus, who may be spearheading a management buyout.

While Grey Global's chairman-CEO, Edward Meyer, declined to put a value on the holding company's stake, APCO has shown strong growth over the 12-year period while in the Grey fold. APCO revenues were $2.9 million in 1991 and have since risen to $47 million. APCO's growth has mainly been organic, though it did acquire Batey Burn & Co., a public relations firm in China in 1999. APCO now has 24 offices in 12 countries.

Acquired in 1991
APCO was formed in 1984 as the consulting arm of law firm Arnold & Porter and was acquired by Grey Global in June 1991.

Mr. Meyer said the move did not indicate any desire to abandon public relations; instead the change is aimed at putting the full weight of Grey Global's resources behind its other PR agency, GCI Group.

"We're committed to one company in every field," Mr. Meyer said. "The two companies have grown up as distinct, and the time has come to put resources behind one."

Management interested in buyout
APCO is hoping the change might enable it to have closer control of its own destiny. APCO management is likely to be one of the contenders for the stake. APCO's senior managers having long expressed an interest in creating a partnership-based entity more like a law firm. They are likely to be one of the contenders for the stake.

"We're looking to move into more of a consultancy for professional services, and seek to partner with investors," Ms. Kraus said.

Known for its grassroots and high-end strategic work for clients such as Microsoft Corp., Avis and Johnson & Johnson, APCO employs a large number of highly paid former government officials and financial communications practitioners.

However, a sale is not a given, Mr. Meyer warned. "We might decide to keep the firm if we don't find somebody."